SJC rules on IFB immunity

A company enjoys qualified immunity regarding its reporting of potentially fraudulent activity to the insurance fraud bureau (IFB), but the immunity does not prevent the company from facing liability for inserting itself into the prosecutorial process, the Supreme Judicial Court has ruled.

The SJC found “a clear legislative intent to ensure that, where there is any question, insurers will err on the side of over reporting suspicious activity to the IFB.”

Thus, the company — defendant AIG Domestic Claims, Inc. — could not be sued for referring plaintiff Jesse Maxwell’s workers’ compensation claim to the IFB.

“The language of Maxwell’s complaint also, however, includes the theory that Maxwell suffered injury as a result of AIGDC’s active participation in pressing the proceedings through communications with prosecutors when it did not have cause to believe that Maxwell had committed insurance fraud,” Justice Francis X. Spina noted for a unanimous SJC.

“Where an insurer acts outside St. 1996, c. 427, §13, and inserts itself into the prosecutorial process, it is not acting pursuant to the statute and is not entitled to statutory immunity,” Spina concluded. “Maxwell’s first three counts allege that AIGDC has engaged in such conduct, statutory immunity is thus inapplicable, and summary judgment cannot be granted on this basis.”